Threat of legal action demonstrates 'how badly trust has broken down' between operators and Gambling Commission, says top industry analyst

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A leading betting industry analyst believes a threat by UK bookmakers to take legal action against the Gambling Commission's plans to press ahead with affordability checks is without precedent. 

Over the weekend the Racing Post revealed that the Betting and Gaming Council's chief executive Grainne Hurst had written to the commission's acting chair Charles Counsell – as well as the government – warning any decision to implement the checks at this stage would be "disproportionate and potentially open to legal challenge". 

The letter also warned that, contrary to the Gambling Commission's assurances that only a small percentage of punters would be caught up in financial risk assessments, as they have been termed by the regulator, the BGC estimated that one in five bettors with an annual spend of more than £200 per year would be affected. 

In its first public statement over the letter, the BGC confirmed that there was a "real risk" that if the commission did not properly review the policy, the industry would be left with "little choice but to consider legal challenge if these proposals proceed without further scrutiny”. 

The board of the Gambling Commission is due to consider next steps for affordability checks at a meeting this Thursday. 

Dan Waugh, of industry analysts Regulus Partners, described the letter as emblematic of the complete breakdown in the relationship between the regulator and the industry it oversees.

Waugh said: "The licensed industry generally tries to get on with its regulator, because it needs to; it’s the most important relationship it has. 

Dan Waugh of Regulus Partners

"I think the fact that it’s got to this pass, really reflects just how badly trust in the regulator has deteriorated. I don’t think I’ve ever heard of a trade body openly talking about a legal challenge.

"Things have not always been this way. There’s always going to be differences and there’s always going to be a bit of friction between licensees and their regulator. 

"But I think historically there’s been respect and that’s pretty much evaporated now; I don’t think anybody trusts or respects the Gambling Commission anymore. And that’s why we’re seeing these unprecedented steps, with reports that a trade body and its members are inclined to take this as far as they can."

Any legal action taken by the betting industry would be through judicial review, a process under which a court is asked to declare a government or agency's action as unlawful. 

Waugh declined to comment on the specific merits of any BGC action, although he said: "The bar for judicial review tends to be very high but I think what you’re seeing is just the levels of frustration.

"Pretty much every part of the gambling ecosystem is starting to say, 'We’ve had enough, this is not acceptable behaviour.' Even someone like James Noyes [of the Social Market Foundation], who is far from sympathetic towards the gambling industry as a whole, is coming out and saying this is inappropriate. 

"When you’ve got so many people saying you’ve got to stop and have a think, and the commission ploughs on regardless, it’s quite clear they’re just not listening. Until they actually accept that the people who are expressing concerns may have legitimate points to make, then this is just going to get worse and worse."

BGC chief executive Grainne Hurst

In response to the Racing Post's reporting of the letter – which was also sent to gambling minister Baroness Twycross, the secretary of state for culture, media and sport, Lisa Nandy MP and the Gambling Commission's acting chief executive Sarah Gardner – a BGC spokesperson said: "We want the Gambling Commission to properly review these proposals before taking any further steps. Evidence from the commission’s own pilot shows these financial risk assessments are simply not frictionless, with serious inconsistencies in the data and a real risk that large numbers of customers will face intrusive financial checks.

“This has to work for all customers, but the evidence so far suggests these proposals are not fit for purpose and risk driving people away from the regulated market towards the growing illegal online black market, where there are no protections and no safeguards.

"Given the serious concerns raised by operators there is a real risk the industry could ultimately be left with little choice but to consider legal challenge if these proposals proceed without further scrutiny."

On Sunday a group of 19 MPs representing racecourse constituencies across Britain wrote an open letter to the secretary of state, urging the government to halt the introduction of checks or risk losses to the racing industry of £250 million in the first five years. 

The Gambling Commission has been contacted for comment.

Read these next:

Racecourse MPs slam insufficient scrutiny and lack of transparency as they urge a halt to introduction of 'damaging' affordability checks 

Bookmakers threaten legal challenge to affordability checks that could mean one in five regular punters are asked for financial documents 

A day that could ruin lives, enrich criminals and damage a great British industry - unless Gambling Commission board members choose to be heroes 

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